The Amazon Effect continues to have quite the effect on the consumer packaged goods industry. For starters, it sets the stage for how products move from Point A to Point B, giving consumers what they want, wherever they want, any time they want and however they want it.
Secondly, it can pose a threat to the CPG/grocery retail relationship that, for decades, has dictated how consumers purchase products.
Or does it?
Here’s how innovation, adaptation and cooperation can help today’s CPGs and grocery retailers remain Amazon-proof:
According to several market research reports, retail is back, and actually, it’s all thanks to the Amazon Effect. Ironic, huh?
That’s because the Amazon Effect forced many of today’s retailers to digitize, optimize and innovate, creating what’s called the hybrid supermarket experience, where a technology-forward, in-store rehab caters to consumers’ needs by delivering products anytime, anywhere and in any format.
For example, Kroger purchased YOU Technology Brand Services, Inc., a cloud-based digital coupon provider, to bridge the gap between online engagement and in-store purchases.
Albertsons partnered with Takeoff Technologies to pilot Takeoff’s micro-fulfillment center concept and artificial intelligence (AI) capabilities to implement an automated e-commerce fulfillment solution.
Target acquired delivery service Shipt to roll out same-day delivery service.
Walmart established a strategic partnership with Microsoft to tap into Microsoft’s full range of cloud solutions to achieve digital transformation and innovation.
And, Giant Eagle unveiled a pilot program with Simbe Robotics to deploy Tally, the autonomous shelf auditing and inventory analytics solution, which ensures products are on shelves when and where customers expect them to be, allowing store associates to focus on customers instead of taking inventory.
Meanwhile, new research from Acosta shows that 97% of all CPG dollars are still being spent in brick-and-mortar retail stores. While online sales grow, so too does brick-and-mortar retail sales, ranking as the most preferred method of shopping for consumers who want to personally select their produce, fresh meats, cheeses and other chilled categories.
A recent Gallup survey reveals that highly frequent grocery shopping is occurring mostly in person, highlighting the potential for growth in the online grocery business.
And, although online shopping is just 2-4.3% of the total $641 billion U.S. grocery market, a study by the Food Marketing Institute predicts online grocery sales will make up 20% of total grocery retail and will reach $100 billion in sales by 2025.
Yet, the retail grocery industry is gearing up for a period of rapid change, with major retail grocers shifting to online ordering for pickup or delivery, in-store dining or on-site food preparation.
Partnering with competitors
According to an Adweek article, many CPG brands opened pop-up shops, acquired competitors and expanded product lines, all in an effort to grow business and remain Amazon-proof.
But, this same article also says the industry is to expect even more partnerships and market expansions, with brands even creating partnerships with competitors to keep the grocery retail landscape alive.
In fact, CPG partnerships are key to e-commerce success, as outlined in an opinion piece by Jennifer Silverberg, chief executive officer of Smart Commerce.
That’s why grocery retailers and CPG brands are working together to create modular groupings, says Retail Info Systems (RIS), to market products together under a single theme. Doing so supports a grocer’s “what’s for dinner” theme, where products from spices to drinks to proteins are marketed together to create a complete meal solution for the on-the-go consumer.
The supermarket of the future
In-store farmer’s markets, larger prepared foods aisles, meal solution sections (see above) and click-and-collect tools are just a handful of features the supermarket of the future will entail.
The grocery stores of the future will be one-third to one-half the size they are today with a more limited, locally curated assortment of products designed to “fit” the local neighborhood, according to RIS’ research.
At the same time, the physical store and e-commerce will become an increasingly connected omni-channel experience, the study adds, where both rely on the other to succeed.
Couple this with robotics, AI and mobile apps, and the supermarket of the future will sport a different look, feel and shopping experience.
While the Amazon Effect has transformed many grocery retail and CPG brands, it’s also created outlets for innovation, growth and future success, and continues to prove that online and brick-and-mortar can co-exist to create improved shopping experiences for the every consumer.